3 Foreign country fiscal policy
During the World War I (1914-1918), the UK increases the
government spending substantially to finance its military spending.
However, the US government spending at that time did not increase
much because of its non-intervention policy. Assume there were only
two countries in the world, the US was a small open economy and UK
was a large country, use IS??LM? model to graphically analyze how
the increase of UK government spending change the real exchange
rate...